Industry
Comes of Age
Organizing Principle:
The Gilded Age fostered the
consolidation of business, the
beginnings of government
involvement in the economy, and
the organization of disadvantage
economic and social classes.
APUSH Chapter 24
Causes of Rapid Industrialization
1. Steam Revolution of the 1830s-1850s.
2. The Railroad fueled the growing US
economy:
 First big business in the US.
 A magnet for financial investment.
 The key to opening the West.
 Aided the development of other
industries. HOW?
Railroad Construction
Why were times zones introduced?
When did this occur?
The Railroad Magnates
Charles Crocker
Collis Huntington
Cornelius Vanderbilt
“The Commodore”
Mark Hopkins
Leland Stanford
What was the main goal of the US gov’t & the
RR industry during this time?
• Build a trans-continental railroad
• What were the major RR companies of the
day?
Union Pacific - construction workers?
Central Pacific - construction workers?
•
Which RR built more miles of track? Why?
•
Which RR company was involved in the Credit Mobilier
scandal?
“The wedding of the rails”
Promontory Point, UT Where?
When? (May 10, 1869)
Railroad Innovation
• Cornelius Vanderbilt – use of a steel rail rather
than iron
• Steel is safer & more economical
• Pullman Palace Cars – travelling luxury hotels
George Pullman
“Wheeled torture chambers” & potential funeral pyres
Jay Gould
RR accidents become very common, yet little
is done to regulate the industry. Why?
Railroad Regulation
• the Grange – group
dedicated to helping farmers
• Major RR are rife with
corruption, use graft to
accomplish goals
• Wabash case (supreme
court)
• RR plutocracy seemed
states had no power to
to control everything
regulate interstate
commerce
• Many late 19th century
Americans are against • Implications of Wabash?
gov’t intervention in
• Interstate Commerce
private business.
Commission (ICC)
WHY?
• How to regulate RR?
• Est by the Interstate
Commerce Act of 1887
• 1st attempt by the feds to
regulate business in the
interest of society
Causes of Rapid Industrialization
3. Technological innovations.
 Bessemer and open hearth


process
Refrigerated cars
Thomas Edison
o “Wizard of Menlo Park”
o light bulb, phonograph, motion
pictures.
Bessemer Process
• Cold air blown on red – hot iron creates steel
• Process of making cheap steel from iron
Henry Bessemer
Thomas Alva Edison
“Wizard of Menlo Park”
The Light Bulb
The Phonograph (1877)
The Ediphone or Dictaphone
The Motion Picture Camera
Alexander Graham Bell
Telephone (1876)
Alternate Current
George Westinghouse
Alternate Current
Westinghouse Lamp ad
The Airplane
Wilbur Wright
Orville Wright
Kitty Hawk, NC – December 7, 1903
Model T Automobile
Henry Ford
I want to pay my workers so that they can
afford my product!
U. S. Patents Granted
1790s  276 patents issued.
1990s  1,119,220 patents issued.
Standard Oil Co.
Causes of Rapid
Industrialization
4. Unskilled & semi-skilled
labor in abundance.
5. Abundant capital.
6. New, talented group of businessmen
[entrepreneurs] and advisors.
7. Market growing as US population increased.
8. Government willing to help at all levels to
stimulate economic growth.
9. Abundant natural resources.
New Business Culture
1. Laissez Faire  the ideology of the
Industrial Age.
 Individual as a moral and economic
ideal.
 Individuals should compete freely in
the marketplace.
 The market was not man-made or
invented.
 No room for government in the
market!
2. Social Darwinism
 British economist.
 Advocate of
laissez-faire.
 Adapted Darwin’s
ideas from the
“Origin of Species”
to humans.
Herbert Spencer
 Notion of “Survival
of the Fittest.”
Monopoly
• What is it?
• Exclusive control of a good or service in a
given market
• Problems with monopolies?
Andrew Carnegie
• Carnegie steel =
monopoly
• Used new business
practice of vertical
integration
• Vertical = buy out all
suppliers
• Horizontal = buy out
all competition
John Rockefeller
• Standard Oil
Company = monopoly
• Standard Oil
processed 90% of
nations oil by 1880
• Paid low wages and
undersold competition
then jacked prices up
when other companies
went out of business
• Used horizontal
integration
New Type of Business Entities
1.
Pool
1887 Interstate Commerce Act
 Interstate Commerce
Commission created.
2. Trust  John D.
Rockefeller
 Standard Oil Co.
√ Smaller companies stock
bought by directors of Standard Oil
By 1877 Rockefeller controlled 95% of all
the oil refineries in the USA
Standard Oil Co.
New Type of Business Entities
2. Trust:
 Horizontal Integration  John D.
Rockefeller

Vertical Integration:
o Gustavus Swift  Meat-packing
o Andrew Carnegie  U. S. Steel
Iron & Steel Production
New Type of Business Entities
U. S. Corporate Mergers
New Financial Businessman
The Broker:
 J. Pierpont Morgan – eliminate wasteful

competition
Consolidated officers of rival businesses and
put on his board of directors
“interlocking directorate”
Wall Street – 1867 & 1900
The Reorganization of Work
The Assembly Line
% of Billionaires in 1900
% of Billionaires in 1918
The Protectors of Our Industries
The ‘Bosses’ of the Senate
The ‘Robber Barons’ of the Past
Cornelius [“Commodore”] Vanderbilt
Can’t I do what I want with my money?
William Vanderbilt
$ The public be
damned!
$ What do I care
about the law?
H’aint I got the
power?
The Gospel of Wealth:
Religion in the Era of Industrialization
$ Wealth no longer
looked upon as bad.
$ Viewed as a sign of
God’s approval.
$ Christian duty to
accumulate wealth.
Russell H. Conwell
“On Wealth”
$ The Anglo-Saxon race
$
$
$
$
Andrew Carnegie
is superior.
“Gospel of Wealth”
(1901).
Inequality is inevitable
and good.
Wealthy should act as
“trustees” for their
“poorer brethren.”
It was the duty of the
wealthy to leave a
legacy that benefitted
society
Regulating the Trusts
1877  Munn. v. IL
Allowed states to regulate certain
businesses within their borders, including
railroads
1886  Wabash, St. Louis & Pacific
Railroad Company v. IL
1890  Sherman Antitrust Act
 in “restraint of trade”
 “rule of reason” loophole
 did not distinguish b/w good & bad
trusts
1895  US v. E. C. Knight Co.
limited the government's power to
control monopolies
Relative Share of World
Manufacturing
The “New South” p. 545
• Read p. 76 in The
American Spirit
• What is the occasion for
the speech?
• What problems does the
south face?
• Leader of the
movement?
Henry Grady
Main goals of the
New South movement?